We identify two “college conundrums.” First, given the large average increase over the last three decades in the financial returns to college, why has the share of college graduates not increased more than it has? Second, why in recent years have young men fallen behind young women with respect to earning a college degree?

We suggest several factors are at play. The first is that the cost of college has also gone up a lot, too. Young people making a decision about college weigh both the financial benefits (better paying jobs) and the costs (tuition and foregone earnings). A related issue is the rising debt burden carried by recent college graduates, as financial aid packages have shifted increasingly toward loans.

A second important factor is that not every college graduate does as well financially as the average college graduate. In 2009, for example, among 25-to-34 year olds with a four-year college degree, about one-in-five men and one-in-seven women actually earned less than the average high school graduate in the same age range.

Given the high costs, debt levels, and uncertain payoff, many students might be making a sensible (if constrained and unfortunate) choice not to get a college degree.

So, if we want more young people to attend college, we need to lower costs, reduce debt burdens, and shore-up the earnings of college graduates at the lower-end of the college-earnings distribution.

CAP has posted an executive summary here; and the full paper in pdf format here.